HomeMy WebLinkAboutSPJTPFA Minutes 2003-03-03(Spec.) SRJPFA 03/03/2003 Page 1
IN THE COUNCIL CHAMBER OF THE CITY OF SAN RAFAEL, MONDAY, MARCH 3, 2003 AT 7:30 PM
San Rafael Joint Powers Financing Authority
Special Meeting
Present: Albert J. Boro, Board Chair
Paul M. Cohen, Board Member
Barbara Heller, Board Member
Cyr N. Miller, Board Member
Gary O. Phillips, Board Member
Absent: None
Also Present: Kenneth Nordhoff, Board Treasurer
Jeanne M. Leoncini, Board Secretary
7:38 PM
LEASE REVENUE BONDS:
CONSIDERATION OF ADOPTION OF RESOLUTION OF THE SAN RAFAEL JOINT POWERS
FINANCING AUTHORITY AUTHORIZING THE ISSUANCE OF LEASE REVENUE BONDS IN THE
INITIAL AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $9,000,000 IN CONNECTION
WITH FINANCING CERTAIN PUBLIC CAPITAL IMPROVEMENTS CONSISTING OF A PUBLIC
PARKING GARAGE, AUTHORIZING AND DIRECTING EXECUTION OF A TRUST AGREEMENT, A
PROPERTY LEASE, A SITE AND FACILITY LEASE AND CERTAIN OTHER DOCUMENTS,
AUTHORIZING THE NEGOTIATION FOR THE SALE OF BONDS, APPROVING AN OFFICIAL
STATEMENT, AND AUTHORIZING OTHER RELATED ACTIONS (RA) — FILE FA -5 x (SRCC) 12-14
Giving a brief perspective, Board Treasurer Ken Nordhoff reported staff had been working on financing
and constructing a parking facility at Third and C Streets for well over two years and this was the
financing element, the culmination of a substantial amount of work. He indicated that Craig Hill from
Northcross, Hill & Ach, Financial Advisor and Dave Fama, Jones Hall, Bond Counsel, who were very
instrumental in putting a lot of this together, were present this evening.
Mr. Nordhoff explained that authority is being sought, up to a limit of $9,000,000, to issue parking
revenue bonds for the purpose of having the necessary financing in place to construct the facility when
the bids come in. While the project is presently estimated at $8,500,000, Mr. Nordhoff stated staff
would like to have the authority of a limit to allow for potential changes in costs or contingencies, getting
closer to bid time.
Mr. Nordhoff stated the series of documents includes:
• A Property Lease, whereby the Joint Powers Financing Authority is acting as a lessor and the
City as lessee. He commented that there was a companion action on the City Council Agenda
this evening. Mr. Nordhoff explained this structure is necessary to be in a position to complete
lease payments which come from the City to the Authority, providing the Authority the necessary
revenue to pay the bonds when they become due;
• A Site and Facility Lease, pledging certain improvements that can be put into place to have the
necessary capital as part of the financing transaction;
• A Trust Agreement, which is required of all bond financings where an independent party,
typically a bank, oversees the entire transaction on behalf of the bond holders as well as the
City's requirements;
• A draft of what is referred to as the Official Statement. This is the document that is actually put
out in the investment marketplace, explaining the financing to potential bond buyers.
Mr. Nordhoff reported that a strong rating on this financing is anticipated. The interest rate environment
is extremely competitive; therefore, the cost of borrowing is expected to be very cheap and competitive.
He recommended that the Authority approve the resolution and related documents, indicating that he,
Mr. Hill and Mr. Fama would be happy to answer questions.
Board Chair Boro recalled that one of the reasons for pledging certain properties was because the City
did not have any collateral to put up. It was also based on timing, as it was necessary to get the money
up front in commencing the project. He inquired whether the assumption was that the only way to avoid
having any City facilities serve as collateral would be to either have all the cash, commence
construction with the City basically fronting the money to a point, then going out for bonds, or whether it
would be necessary to have the project completed in the absence of collateral such as a building.
Mr. Nordhoff stated that a Study Session took place approximately one month ago where options were
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discussed, one of which pertained to whether to capitalize interest. Explaining, he stated that because
the facility would not be built, it would be necessary to have a mechanism in place to ensure the
bondholders were paid at 6 -month increments once the debt was issued. In order to do this, he
indicated that possession and use of the facility would be required; therefore, to take this course, it
would be necessary to ensure other assets were available beyond just the parking structure, as a lease
could not be put in place for a non -existing asset. Mr. Nordhoff indicated that staff had purposely set up
the financing to allow for evaluating capitalizing interest, as previously directed by the Board. He stated
that part of this was also necessary because the City had just started with new parking rates and staff
wished to ensure that sufficient cash flows were available. Staff had been modeling the Parking
Services Fund for several reasons; however, believed it would be prudent to allow it to generate
sufficient money over the next couple of years. Mr. Nordhoff stated it was believed this structure in
many ways, protected the City's parking funds.
Board Chair Boro inquired as to the assumption on interest.
Craig Hill, Northcross, Hill & Ach, Financial Advisor, stated that presently, they were assuming the City's
cost of funds for fully amortized financing was approximately 4.9% to 4.95%. He explained the interest
rates are actually established on a year -by -year basis and as with a regular mortgage, some principal is
being paid down every year, each principal piece having its own interest rate. Mr. Hill stated that the
interest rate on a 2006, three-year principal payment is somewhere in the 1.2% range, with the long end
presently at approximately 5%.
Board Member Phillips complimented Economic Development Director Nancy Mackle, City Manager
Rod Gould and Board Treasurer Ken Nordhoff for putting the project together. He noted it was
complicated, as evidenced by the volume of paper, and stated staff had done an outstanding job.
Board Member Phillips moved and Board Member Miller seconded, to adopt the resolution
RESOLUTION NO. FA -03-1 — RESOLUTION OF THE SAN RAFAEL JOINT POWERS
FINANCING AUTHORITY AUTHORIZING THE ISSUANCE OF
LEASE REVENUE BONDS IN THE INITIAL AGGREGATE
PRINCIPAL AMOUNT OF NOT TO EXCEED $9,000,000 IN
CONNECTION WITH FINANCING CERTAIN PUBLIC CAPITAL
IMPROVEMENTS CONSISTING OF A PUBLIC PARKING
GARAGE, AUTHORIZING AND DIRECTING EXECUTION OF A
TRUST AGREEMENT, A PROPERTY LEASE, A SITE AND
FACILITY LEASE AND CERTAIN OTHER DOCUMENTS,
AUTHORIZING THE NEGOTIATION FOR THE SALE OF
BONDS, APPROVING AN OFFICIAL STATEMENT, AND
AUTHORIZING OTHER RELATED ACTIONS
AYES: BOARD MEMBERS: Cohen, Heller, Miller, Phillips and Chair Boro
NOES: BOARD MEMBERS: None
ABSENT: BOARD MEMBERS: None
Board Chair Boro thanked staff and the financial advisors for their great work.
There being no further business, the San Rafael Joint Powers Financing Authority Special Meeting was
adjourned at 7:43 p.m.
JEANNE M. LEONCINI, BOARD SECRETARY
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